C/ Caballero de Rodas, 1A, 3ª Planta
03181 Torrevieja, Alicante, Spain
Tel: (34) 966708301
www.bentoproperties.com
e-mail: [email protected]
Rechtsanwälte, Lawyers, Abogados, Advocaten
Our legal department offers one of the most focused and dedicated services to our
purchasers. They understand the concerns of being a foreign investor in another country
and it is our primary goal to give a professional, friendly and efficient service which is
guaranteed throughout your transaction.
We are offering legal services in the following areas:
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Conveyancing and Real Estate Law
Urbanistic Law
Company foundation, tax and accountancy
Fiscal advice on personal, property and business taxation
Litigation
Civil, Fiscal, Mercantile and Trading Law
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The purchasing process
Our legal department managed by lawyers and barristers
In Spain, will provide the legal guarantees for the purchase of the property, ensuring
that Spanish legal requirements are met. Your lawyer will check to ensure that the
property is bought free of encumbrances, liens, charges or debts and that all payments of
local contributions and community charges are up to date.
Property searches
The property searches may vary depending on the kind of property that you have chosen
to purchase. Using a lawyer from your home country could substantially increase your
legal fees and most certainly will delay the sales process.
Reservation deposit and contract
Once you have found the right property, the purchase process begins with a reservation
agreement, which takes the property off the market and also “freezes” the purchase
price. The deposit to be paid at this stage is between 3,000 and 12,000 Euros. Before
arriving in Spain, ensure you have funds available. The best way to pay the reservation
fee is by credit card or transfer. It is not advisable to pay by cheque, especially if drawn
on a foreign bank account, as it can take approximately 14 days to clear at a Spanish
bank. Such a delay could cost you your property.
Exchange of private contracts
Within approximately 14 days of signing the reservation agreement, the private
purchase contract is to be signed between the buyer and the seller (or their authorized
representatives). During this time, the lawyer should have completed the investigations
and searches in relation to the property and will have arranged with the seller the
procedure for cancellation of any outstanding debts. It is customary practice at this point
to pay between 10 to 50 % of the purchase price. Funds can be lodged in your own
Spanish bank account and your lawyer can arrange for an account to be opened for you
Or on your lawyer´s escrow account. Our legal department have negotiated some
competitive rates with local Spanish banks for their clients.
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Formal completion and exchange at the Notary
A property sale is formally completed in Spain when the title deed (escritura de
compraventa) is signed before a Public Notary in Spain, the agreed final payment is
made and possession of the property is passed to the new owner. In the case of new
builds, it can take up to 18 months before completion and usually payments are in
stages of two to four months, by cheques from a Spanish bank account or bank transfer.
Registration
Once the title deed is signed, the notary will fax a copy of it to the local land registry.
Your lawyer will pay on your behalf all the relevant transfer taxes and will deal with the
formalities of registration of your title deed. Final registration of the title deed may take
several months. Your lawyer will arrange for the transfer of the utility service accounts,
such as water and electricity, to your Spanish bank account.
Purchasing a property on a new development
When purchasing a property on a new development, the developer should provide bank
guarantees against each payment made on account of the purchase price. A bank
guarantee protects your payments. In the unlikely event that the developer fails to
complete the property, it will go into liquidation or where they fail to complete on time
and you do not wish to wait, all funds will be returned in full. New property is handed
over without water and electricity connection. This can however, be arranged by a
lawyer. Connection of such services can take up to four weeks following completion.
Therefore, we suggest that you do not make any plans to use the property during that
period. Under Spanish law, the developer will issue you with a liability construction
guarantee.
Costs
There are in principle three fees and one tax to pay when purchasing property in Spain.
You should budget that the costs involved purchasing a property in Spain are
approximately 11-14% of the purchase price. If you have a mortgage there is an
additional cost of approximately 2% of the property purchase price.
The fees
1) Legal fees: The legal fee depends on the service you require, plus VAT (IVA)
currently charged at 21%. We have a transparent fee structure with clear advice
of any charges and fees.
2) Notary fees: the notary charges according to a fixed scale, depending upon the
official value of the property. The charges may range from 300 to 1200 Euros.
3) Property Registry: Generally 60-80% of the notary fee.
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The tax
Other costs to bear in mind are as follows:
- Change of utility contracts and organising their payment by direct debit
- Fiscal representation
- Community representation
- Wills
- Insurance
- Water and electricity connection charges
- NIE number
This is the Spanish Tax number which will be requested by the notary in order to
sign the title deed. We recommend that you apply for your NIE number at an early
stage as you need to be present in person at the local Spanish police station to do so.
We can organise an appointment at the police station for you and will accompany
you there.
- Power of Attorney
You should provide your lawyer with a power of attorney in order to act on your
behalf with regards to your purchase.
Bear in mind Annual Property Costs.
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2)
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5)
Community fees
Local Real Estate Tax (IBI)
Annual Income Tax (non resident tax)
Utility Services
Insurance
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Mortgages
Spanish banks are willing to give mortgages to non-resident purchasers of property in
Spain. The period of the mortgage depends upon the age of the buyer but can be
extended up to a maximum of 30 years. The amount borrowed is 60 to 70% of the
property’s value, depending upon your income and assets. You will need to provide
proof of your capacity to repay the mortgage and most banks will look for earnings per
month in excess of three times your expected monthly mortgage repayment.
Documents required by the Spanish bank to apply for a mortgage:
1) Last three pay slips
2) Last tax return
3) Banks reference to include telephone, fax number, name of manager and account
numbers
4) Last three statements of your bank account
5) Statements of current assets and liabilities
6) If employed, a letter from your employer stating the length of employment,
salary, etc. is required. If self-employed, profit and loss accounts signed by a
Chartered Accountant are required.
Wills
You should make a separate Spanish will dealing exclusively with your Spanish assets
in order to avoid time-consuming and expensive legal problems for your heirs. As a
foreigner, you will usually find that Spanish authorities do not oblige you to follow the
Spanish law of compulsory heirs. You can leave your property to whomever you
choose, as long as your own national law permits it.
Selling a Property
1) Capital gain is due on the sale of the property. The tax is calculated as the
difference between the value of the property at the time of its acquisition and the
value at the time of its sale. The tax rate is 21 % for both non-residents and
residents.
2) If the vendor is a non-resident in Spain, the purchase will need to retain 3% of
the purchase price and pay it to the Tax Office Treasury on account of the
potential liability to Capital Gains Tax. Your lawyer will inform you about
existing exceptions. If you have no benefices on the sale, you can ask the Tax
Office to refund this 3% (or a part of it) retained.
3) Plus Valia: This is a Municipal tax paid on the increase in value of the land since
the previous sale and is fixed by the local Tax Authorities. It is calculated based
upon the size of the land. By Law, the vendor is obliged to pay this tax.
4) Lawyer´s fees.
5) Real Estate commission
6) Mortgage costs. If there is a mortgage on the property, you must consider the
bank costs for the cancellation of the mortgage and the notary and registry fees.
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